AUD/USD sellers attack 0.7100 as Omicron fears escalate, yields stay pressured

• AUD/USD remains on the back foot for the second consecutive day, refreshes weekly low at the latest.
• Australia’s most populous state NSW report 50% jump in virus cases, UK reports the first Omicron-linked death.
• Australia’s NAB sentiment numbers came in mixed for November.
• Indecision over Fed’s next moves, geopolitical risks also favor sellers ahead of the key central bank meetings, Aussie jobs report.

AUD/USD takes offers to refresh intraday low around 0.7110, down 0.27% daily, during early Tuesday. In doing so, the Aussie pair prints a two-day downtrend to a one-week low as market sentiment sours.

The main catalysts behind the risk-off mood are multiple negatives concerning the COVID-19 variant linked to South African, dubbed as Omicron, as well as geopolitical fears and cautious mood before critical central bank monetary policy meetings.

Australia’s largest state, population-wise, New South Wales (NSW) reports the highest daily virus infections tally in more than two months, per Bloomberg. “The state recorded 804 new virus infections in the 24 hours to 8 p.m. Monday, a 50% jump from the day before, officials said in a statement Tuesday. It’s the largest tally since Oct. 2, when its largest city Sydney was in the midst of a months-long lockdown to combat the delta variant,” the news adds.

Elsewhere, the UK’s first Omicron-linked death and return of the mask mandate in California are some of the latest updates concerning the virus strain.

While citing the virus-led pessimism, the finance ministers and central bank governors of the Group of Seven (G7) nations pledged more efforts to combat the pandemic. Also portraying the Omicron effect is the update from the Asian Development Bank (ADB). “The ADB on Tuesday trimmed its growth forecasts for developing Asia for this year and next to reflect risks and uncertainty brought on by the new Omicron coronavirus variant,” per Reuters.

It’s worth mentioning that the US House of Representatives and the Senate inch closer to an agreement over the Uyghur Bill aimed at China, per Bloomberg. The same triggered geopolitical tensions between Washington and Beijing previously. On the same line was the latest update from Axios saying, “White House National Security Adviser Sullivan to visit Israel next week to discuss Iran.”

Above all, anxiety over the US Federal Reserve’s (Fed) next move and cautious sentiment ahead of Australia’s employment report for November, up for publishing on Thursday, challenges the AUD/USD prices.

Talking about data, National Australia Bank’s (NAB) Business Conditions grew from 11 to 12 in November while the NAB Business Confidence eased to 12 versus 21 prior.

Amid these plays, the US 10-year Treasury yields seesaw around 1.42% whereas the S&P 500 Futures print mild gains. Furthermore, shares in Japan, Australia, New Zealand and China trade mixed by the press time.

Moving on, the US Producer Price Index (PPI) for November, expected 9.2% YoY versus 8.6% prior, may offer intraday direction to the AUD/USD prices but major attention will be given to the risk catalysts.

Technical analysis

Failures to cross an 11-week-old horizontal hurdle surrounding 0.7175-80, which also includes the 21-DMA, direct AUD/USD sellers to attack the 10-DMA level near 0.7110. It should be noted, however, that MACD and RSI conditions aren’t in favor of welcoming the bears. The same requires a clear break of the 0.7110 support before highlighting the 0.7060 and the 0.7000 round figure.